CONNECTICUT CORPORATE ANTI-FRAUD ACT
by Theodore P. Augustinos
July 11, 2003
On July 9, 2003, Governor Rowland signed into law Connecticut’s corporate anti-fraud statute
(2003 Conn. Pub. Act 03-259, §§ 33-39) (the “Connecticut Corporate Anti-Fraud Act”). This
statute, which will become effective October 1, 2003, represents the state’s response to the
widely publicized corporate scandals of the past few years. The new law has important
implications for publicly held corporations, in some respects regardless of whether they are
incorporated or authorized to do business in Connecticut. Among its potential effects, the
Connecticut Corporate Anti-Fraud Act raises the specter of CUTPA claims for certain violations,
and increases risks to CEOs and CFOs. Although earlier drafts of the Connecticut law extended
far beyond the Sarbanes-Oxley Act to apply to all corporations, as enacted, the statute is limited
to public companies. This article compares the new state legislation to the federal Sarbanes-
Oxley Act of 2002.
Some of the provisions of the Connecticut Corporate Anti-Fraud Act apply to all publicly held
corporations and others apply to publicly held corporations organized under the laws of, or
authorized to do business in, Connecticut. Section 33 prohibits both individuals and publicly
held corporations (regardless of whether they are organized or authorized to do business in
Connecticut) from altering, falsifying, destroying or concealing documents, records or tangible
objects in order to obstruct or influence an investigation by the state once the investigation has
begun or after reasonable knowledge that an investigation is likely to begin. For this purpose,
“investigation” applies only to investigations pertaining to publicly held securities. The main
difference between this section and the comparable section of the Sarbanes-Oxley Act (18 U.S.C
§ 1519) is that the Connecticut Corporate Anti-Fraud Act refers to a state investigation and the
section in the Sarbanes-Oxley Act refers